Deposit insurer will work with ‘any group’ interested in starting de novo bank

Any group interested in starting a de novo community bank will find a ready partner in the agency that insures bank deposits and serves as the lead federal supervisor for most community banks, the agency’s board chairman said Monday.

Federal Deposit Insurance Corp. (FDIC) Board Chairman Martin J. Gruenberg told a gathering of regulators and community bankers in Springfield, Ill., that encouraging the formation of “de novo” banks (that is, banks that are newly chartered and not acquired through purchase) is a top priority for his agency.

“I want to emphasize that the FDIC is committed to working with, and providing support to, any group with an interest in starting a community bank,” Gruenberg said.

The deposit insurer’s board chairman noted that during the past year, his agency has approved eight applications for deposit insurance for new community banks. He also pointed out several other areas in which the agency is encouraging the creation of new community banks.

“We have reduced from seven years to three years the period of enhanced supervisory monitoring of newly insured depository institutions,” Gruenberg said, explaining that the FDIC had established the seven-year period during the financial crisis in response to the disproportionate number of newly insured institutions that were experiencing difficulties or failing.

“In the current environment, the FDIC determined it was appropriate to return to the three-year period,” he said.

Gruenberg also said the agency is encouraging new banks by:

  • designating professional staff in each regional office to serve as subject matter experts for deposit insurance applications.
  • holding outreach meetings in each of FDIC’s regional offices to inform interested parties and industry participants of the application process and the tools and resources available to assist organizing groups.
  • publishing “Applying for Deposit Insurance – A Handbook for Organizers of De Novo Institutions,” intended to help organizers become familiar with the deposit insurance application process and understand the path to obtaining deposit insurance

“We understand the importance of establishing new community banks with strong business plans without undue delay,” the FDIC chairman said. “And we remain committed to working with organizing groups to get their applications approved so they can begin serving the financial needs of their communities.”

Remarks by Martin J. Gruenberg, Chairman, Federal Deposit Insurance Corporation on The Importance of Community Banks to the U.S. Financial System and Economy at the “Day With the Secretary” Event; Hosted by the Illinois Department of Financial and Professional Regulation’s Division of Banking and the Conference of State Bank Supervisors; Springfield, IL